"We understand from our own technical investigations that the security of some YahooXtra email customer accounts may have been compromised, making it possible for emails to be sent from these accounts without the customers' knowledge," Telecom said in a statement.

Believing the hacking to have affected a small percentage of its 500,000 customer base, Telecom boss Chris Quin said the company is working with Yahoo to try and solve the problem.

"We would like to apologise to all our customers for any distress or inconvenience caused and assure them that we are doing all we can, in conjunction with Yahoo, to resolve this incident," he said.

With some users complaining of receiving emails from dead relatives, the "unfortunate incident" according to Telecom threatens to undermine confidence in online email security until a solution can be found.